Mr Noonan gave his strongest indication yet that the saving could be used to ease the €3.1bn of cuts and taxes planned for the October Budget, but said he will not make his mind up until a month out from budget day.

He told RTE's 'Week in Politics' there are options emerging, but insisted the Budget will be tough no matter what.

Labour would prefer if the savings from the promissory note are used to ease up on cuts and taxes, while some in Fine Gael would prefer infrastructural spending. Others are pushing for tax cuts.

The initial target is for a €3.1bn reduction in the 2014 Budget, followed by €2bn the following year.

Mr Noonan said: "We have to make targets in the programme and the ultimate target is to get the deficit below 3pc by the end of 2015.

"That, in cash terms, is about €1bn. Now there are options on it, we could ease up on the correction process and still meet our target.

'PRUDENT'

"That would mean less cutbacks and less tax increases. On the other hand, we could use it to invest in infrastructural projects to deliver on one of our main priorities: to get people back to work, to grow the economy or we could do something in between."

But he said he would not make a final decision until he had studied all the economic data available to him.

"I will listen to all the advices colleagues give me, both collectively and separately, but there is a prudent call to be made in the best interests of the country and the best interest of the Irish taxpayer.

"Whether it is going to be an adjustment of around €2bn or an adjustment of around €3bn, it is still going to be a pretty tough Budget.

"The leeway is only to reduce the impact of the severity. It is still going to be tough but having done that, we will nearly be there then."

He also said he hoped to have a proposal on getting the European Stability Mechanism to retrospectively recapitalise the banks prepared by the autumn.